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I have surplus amount with me but I do not want to risk

I have surplus amount with me and I do not want to risk with that amount, and I do not want that to stay idle in the saving bank account. So can you please suggest where can I invest that amount, I mean very very low risk or no risk at all. But better returns than saving bank account FOR SIX MONTHS ONLY, because I want that amount after six months for some urgent work; that I will withdraw that amount step by step only after six months. please suggest one?

Jan 14, 2016 by Ramesh, Bangalore  |   Mutual Fund

It is true that mutual funds are subject to market risks but the degree of risk varies from product to product. Have you heard about liquid funds? These funds invest in money market securities and offer a very high degree of safety. In fact, over the last 5 years liquid funds gave negative returns in only 1 month, that too because of an unique situation in 2013. Liquid funds have no exit load, which means that you can draw your money at any time without any charge. To know more about liquid funds, including top performing liquid funds, please read our article, Top Liquid Mutual Funds: Better options than savings bank for parking your surplus cash. Over the past one year good liquid funds have given on an average 8% annual returns, nearly double your savings bank interest.

If you do not plan to draw your money for the next 6 months, then you can also explore ultra short term debt funds. Ultra short term debt funds are very similar to liquid funds, except that they invest in securities of slightly higher maturities compared to the securities that liquid funds invest in. Therefore, the volatility in NAVs is slightly higher than liquid funds, but these funds can give you slightly higher returns than liquid funds (please see our article, What are the best options for parking your surplus cash in Mutual Funds Part 2). Please note that the article is slightly dated, so the returns mentioned in the article may not be reflective of the current returns but you will get an understanding of Ultra Short term debt funds by reading the article. To get the latest returns, please see the top performing ultra short term debt funds in our MF Research section by clicking on this link.

When investing in liquid and ultra short term debt funds, pay attention to AUM of the schemes and their expense ratio. Select schemes which have substantially large AUMs and low expense ratios. You can check AUMs and expense ratios by typing the scheme name in our Mutual Fund Selector in our MF Research section. You can consult with your financial advisor and make a decision that is most well suited for your needs.

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